Relationship between cost of doing Business and Company Tax Rates

Relationship between cost of doing business, company tax rates and business start ups


The financing of business start-ups is one of the most fundamental questions for enterprise research. The financial capital is considered as the necessary resources for enterprises for subsequent operation. The capital decisions and the use of debt as well as equity at the start-up is seemed to have the implications with the operations in business, firm performance along with risk failure as well as the potentiality for expanding the business (Van Stel, Storey, & Thurik, 2007). 
This research paper investigates the relationship of the cost budget in case of a startup business and its tax rates with the business start-ups. It also finds out the determinants of the capital structure and also the use of financing along with the business start-up. The both the qualitative as well as qualitative research are carried out for examining the start-up. In doing so, there are three deficiencies of existing empirical research which will be examined for the start-up financing. At first, for decrease in time between start-up as well as surveying, there is the potential for survivorship bias which in confounding the findings in the study that is lowered. In the second case, the study will go beyond the descriptive nature which is provided testable implications that also developed upon the financial theory. It includes the tested impact of the asset structure over the capital structure. Third, within the nationwide survey, there are multiple industries which overcome the generalization problems which is associated with the samples for limited geographic as well as the scope of the industry.


The objective of the project is to find out the relationship between the cost of doing and the company tax rates for the start-up business. There are various techniques as well as the understanding significance from the view point of business research. The idea of the business research is needed to be applied to the situations of the business. The assessment for existing business will examine the business situation. There are different business requirements which are assessed as well as compare with different approaches when the organization inquires for the venture. The examination proposition is thus built up considering the extended design while writing the audit for having capacity for unravel the business issue so that it will clarify the inquire about the results.  


The scope of this research paper is to search the requirements of financial issues and data for the start-up business considering the whole business process while design the instruction, the sort out as well as the business will inquire about the venture. That whole business has been considered in this process for examining the extraordinary details from the process of description to the rational business followed by a serious writing audit while choosing the exploration system for gathering the breakdown information for composing the study paper.


The start-ups business , like Doing business have been considered as the new data on the basis of business regulations which will enables the research for flourishing. There are some extensive empirical literatures which will be assessed how the environment for the business will affects in a broad range. Since 2003, there is the report that is published and other 1578 articles on research have been found to be discussed on the influence of the economic outcomes in business. There are another 4464 peer reviewed academic journals have been posted online (Cassar, 2004).
According to Kaplan, Piedra and Seira (2011), the data has been used on basis of Mexico construction scenarios which shows how quickly the new firms has been found to be create without the business registration reform. There are two control groups which working on the basis of ides so that controlling of municipalities as well as the industries will be in good proxies for what have happened or reformed. This entry regulation has been found to be 5% on the formal firms for shifting the economy through the note of this effect as per their permanent job (doing business, 2014).
As per the economy of the world, there is a linkage between the public and the private sectors and that is found to become the competitors in global markets when considering their international trade practice. For a new firm, there is a great significance of trade rights and that will be available in Doing Business as the indicators on the trading. As per Hoekman and Nicita (2011), there are cross sectional data from 105 economies in 2006 as well as for gravity –type regression model and that will control the logistics quality as well as several tariff or nontariff costs which consist of import as well as export costs data for high and negative relative trade volume. In similar fashion, Djankov, Pham and Freund has been assessed the impact of the time delays in case of exporting the aggregate bilateral trade volumes within 98 countries. 
This is also very important to consider the courts, bankruptcy laws, investor protection or the credit markets among various regulatory areas that covered by Doing Business and that will be received less attention in case of Doing Business in most of the developing economies. 
The study based on the points of movable assets having limiting access for the small firms for financing and that is also examined by Martinez-Peria, Love as well as Singh (2013), while introducing the movable sets of collaterals in case of firm’s access for the bank finance when there is a need for data on behalf of Enterprise surveys as well as Doing Business condition (Michael & Noseleit, 2013).
On the other hand tax regulation in one of the important and contentious topics as part of the public policies as well as economics which is prompted for the large body in theoretical as well as prompted work that will investigate the high tax rates as well as the complex tax codes along with the procedures. Djankov and others (2010) have examined the effectiveness of the corporate tax rate which has a great effect in the financial balance for the new start-up firms. It also shown by Monteiro and Assuncao (2012), the effect of the formal economy for the reformation of tax in the form of SIMPLES and that will reduce the number of taxes as well as the tax procedures for the micro as well as the small start-up business (Australian Government, 2017).


The primary question is set up as, 
  1. Why there are so much tax impositions for a startup business? 
Here are some secondary questions,
  1. Why the start-up has a low financial growth?
  2. Why the start-up business has the negative correlation with the business density and the cost for starting a business depends on the factors like gross national income or GNI?
As per the discussion in the literatures review, there are the advantages for registered companies for the legal as well as the financial services that will be provided by courts as well as commercial bank. But there are no such services available for any unregistered business. For that reason Doing business will have the protections from social security as well as the economy benefits as per the positive spillovers. The formal entrepreneurship has the higher job creation as well as the economic growth for formalizing the tax base. It has been thus found mostly small and medium sized enterprises have continued to start-up as well as operate under the sub-optimal conditions in the economics all over the world. Therefore, the entries barriers will constitute the early constraints for aspiring the entrepreneurs while encounter attempting the access for the formal economy. The rules are excessively burdensome as well as the resource-constrained entrepreneurs will have not be find the opportunity to turn out the ideas in the business within the level playing field. So that, there is difficult for the start-up business and that can prevent the economy as well as the private sector will reaping the benefits for business formalization.


The qualitative research is the informal as well as semi-systematic research process which is found in highlighting the words instead of numbers for the collection as well as the analysis of data. The main steps for the process consists of
  1. Some general research question
  2. Selection of relevant subjects or the sites.
  3. Relevant data collection
  4. Analysis for interpreting data.
  5. Conceptualization of theoretical data
  6. Writing up findings.
The qualitative research validity has been referred to the issues on whether or not the indicator will really measures the concept for the devised for measurement and on the other hand, reliability is subjected to follow the stability as well as the consistency of measurement. 
This refers to the way of observations that are selected with the population for being the sample for the survey:
  1. Population parameter: It is the parameter which has the true value for the population attribute.
  2. Statistic Sample: It is an estimation that is based on the sample data for the population parameter.
The simple and irregular examination is essentially being utilized for the quantitative research process along with the logical research process. This rise thus makes rising the chance for all kind of population to determine all together for getting the information. The straightforward arbitrary has been used to examining the tax system within the organization, the financial statement for the costing of the business. The strategy set up for the start-up business has been utilized as the part of the request which will react with exploration questions.  
It has been determined that the process of choosing the number of observations will replicate and also includes in the statistical sample. The size of the sample is found to be important feature for the empirical study in case to reach the goal for making the inferences about the population from the sample. In this specific research, the size of the sample has been taken as the public through Lottery based simple random as well as sampling process. 
This is the process for assembling as well as measuring the data for the variables to recognize the systematic form for enabling someone to answer the expressed research questions or the test theories as well as the estimation for the results.
This is the source of information in which the data should be arrived at very first time. The interviews as well as questionnaires are developed and data are collected from public.
This is the kind of information that is gathered by someone else other than the user. The peer-reviewed journals, published books as well as other articles are used as the data resources.
The other model specifications have been referred with the determination of the independent variables and that should be included or can be excluded from the regression equation.
The first step of the process will get to know about the data that will analyze and interpret the data for construct the final report. 
The quantitative research is considered as formal, having a fixed objectives as well as the efficient process where there is the numerical information for utilizing the data to get to know about the world. There is the exploration of the techniques to be utilized for portraying the factors, inspecting the connections among the factors as well as deciding the circumstances with end of results associations in between the factors. 


In this research process, there are few numbers of limitations have been followed and those cannot be ignored as well:
  1. Most authors are found to be presented with negative view relating the financial data process in case of unregistered start-up business. Although, there are other regulations for the start-up business which would be followed by them, but the tax regulations and other financial expenses are found to be more in this case.
  2. The limitation of the data is taken from different countries. In case of developed countries there are different data processes as compared with the developing countries (James, 2008).




The above research process has encouraged showing the relevance on the basis of policy reforms in the areas that is measured under Doing business. For the future research it is very necessity to provide the ample evidence for the positive links among better regulations for business as well as the economic performance. The more rigorous research has needed to understand the better and former causes. There are very deep relationship is thus found in between the tax rates and the cost effectiveness for the start-up business as the economies has been focused on the areas, like trade, labor markets as well as credits markets or taxation along with the protecting the investors. Moreover, it is also concluded that, there are only some handful studies which help to separate out the impact in case of business regulatory environment for the overall performance as well as the economic growth along with the productivity of the investment.


Australian Government. (2017). Tax differences between a sole trader and a company. Retrieved from
Cassar, G. (2004). The financing of business start-ups. Journal of business venturing, 261-283.
doing business. (2014). Research on the effects of business regulations. Retrieved from
James, A. (2008). Small Business Uniqueness and the Theory of Financial Management. Journal of Small Business Finance, 1-13.
Michael, F., & Noseleit, F. (2013). Investigating the Anatomy of the Employment Effect of New Business Formation. Cambridge Journal of Economics, 349-377.
Van Stel, A., Storey, D. J., & Thurik, A. R. (2007). The effect of business regulations on nascent and young business entrepreneurship. . Small business economics, 171-186.

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